Illinois General Assembly

Today was  the last day of the spring legislative session. The House wrapped up its spring session on Saturday.  The Senate wrapped up its spring session today.

This newsletter contains a quick summary of major tax and budget legislation that passed both houses of the General Assembly during the spring session.  In next Friday's newsletter, I'll discuss some of the things that didn't pass and discuss anything I may have missed today.

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Budget bills

HB 62 - Senate amendments 1 and 2 - capital bill appropriations bill - passed the Senate, passed the House

 

HB 142 -Senate amendment 1 - bonding authorization bill - passed the Senate, passed the House

 

SB 262 - House amendment 1 - FY 20 appropriations bill for the operating budget. This bill passed the House, passed the Senate.

 

SB 689 - House amendment 3 - passed the House on 6/1, passed the Senate on 6/2

• P.43, and 77, addback for FDII income,
• P. 117, and 138, marketplace seller and facilitator nexus language,
• P. 143, income tax amnesty 10/1 - 11/15/19,
• P. 148, managed care provider assessment,
• P. 156, Franchise tax amnesty 10/1 - 11/15/19,
• P. 157, Blue Collar Jobs Act (total credits capped at $20 million per fiscal year)
  • High Impact Business construction jobs income tax credit,
    • 50% of incremental income tax from construction jobs
    • 75% of incremental income tax from construction jobs in underserved areas (works like EDGE),
• Enterprise Zone construction jobs income tax credit
  • 50% of incremental income tax from construction jobs
  • 75% of incremental income tax from construction jobs in underserved areas (works like EDGE),
• P. 187 - income tax credit language
• P. 218 - Amends EDGE to add "New Construction EDGE Agreement"
• P. 222 River Edge Income Tax Credit - capital investment of at least $1,000,000 in a qualified rehabilitation plan
• P. 231 - amends EDGE to authorize "New Construction EDGE credits" - requires capital investment of at least $10,000,000
• P.244 - River Edge construction jobs credit
• P.258 - expand the manufacturing machinery and equipment exemption to cover items formerly covered by the Manufacturers' Purchase Credit. This provides a full sales tax exemption without the reporting and tracking requirements of the former MPC (See P.272 for the definition of production-related tangible personal property.).
• P.313 - begins a gradual repeal of the Corporate Franchise Tax - 2020 through 2024.

 

SB 690 - House amendment 3 - passed the House, passed the Senate

• P. 1 - "Level the Playing Field for Illinois Retail Act" (I'll analyze this in more detail on Friday. This is a complicated and convoluted revision of the Retailers' Occupation Tax and the Use Tax that converts certain out-of-state sellers to retailers under the ROT from Use Tax collectors and imposes local sales taxes on such sales using destination sourcing. I have this concerns about this legislation on legal and practical grounds.The good news is that this provision has a severability clause in case someone litigates this portion of the bill successfully.).
• P. 7 - Parking Excise Tax -
  • 6% on an hourly basis and 9% of paid for monthly
  • Valet services - tax on the valet charge
• P. 37 - The Chamber's data center legislation
• P. 45 - Data center construction employment tax credit - income tax credit 20% of the wages to employees of contractors employed by a certified data center in an underserved are
• P. 81, 97, 113 - Data center sales tax exemptions

• P. 51, 119, 150 - trade-in credit for cars and light trucks limited to the first $10,000 - originally the trade-in credit was $10,000 for all trade-ins - I drafted the limiting language.
• P.59 - Wayfair nexus language is repealed from the Use Tax Act
• P. 170, 181 - Cigarette tax raised from .99 to 1.49, 
• p.177, 183 floor stock tax
• P. 189 - e-cigarettes included in Tobacco Products Tax
• P.193 - Tobacco Products Tax rate not increased
• P.194 - e-cigarettes taxed at 15% of the wholesale price
• P. 198 - Illinois Works Jobs Program Act
  • Pre-apprenticeship program
  • Apprenticeship initiative
• P. 227 - Sports Wagering Act
• 6 new casinos
• Slots at the tracks
• Video gaming tax increase

SB 1814 - House amendment 1 and 2 - passed the House, passed the Senate -  budget implementation bill (BIMP)

 

SB 1939 - House amendment 2 - transportation funding bill (horizontal infrastructure) - passed the House, passed the Senate

• Motor Fuel Tax is increased from $.19/gallon to $.38/gallon
• Diesel - the additional tax raised from .025/gallon to .075/gallon
• Registration fees are increased - passenger cars increased from $98 to $148
• Municipalities in a county of more than 3 million can impose a local motor fuel tax at a rate up to $.03/gallon
• County Motor Fuel Tax -
  • adds Lake and Will counties to DuPage, Kane and McHenry
  • increased to an $.08/gallon maximum
  • annual inflation adjustment

Constitutional amendment

SJRCA 0001 - graduated income tax constitutional amendment

• passed both Houses of the General Assembly and will be on the ballot in November 2020.
• Removes a provision that provides that a tax on income shall be measured at a non-graduated rate. Provides that the General Assembly shall provide by law for the rate or rates of any tax on or measured by income imposed by the State. Provides that the highest rate imposed on corporations may not exceed the highest rate imposed on individuals by more than a ratio of 8 to 5.
•  Article XIV of the Illinois Constitution provides in pertinent part "[a] proposed amendment shall become effective as the amendment provides if approved by either three-fifths of those voting on the question or a majority of those voting in the election." 

 

Tax-related Senate Bills passed both Houses

SB 39 -   Amends the State Finance Act and creates the Illinois Property Tax Relief Fund. Provides that moneys in the Illinois Property Tax Relief Fund shall be used to pay rebates to residential property taxpayers in the State. The legislation has no funding mechanism. Funding will be determined by Property Tax Task Force established by SB 1932 (referenced below).

 

SB 527 - Amends the Property Tax Code. Provides that the amount paid to the Will County Treasurer from the Tax Recovery Fund to compensate taxing districts for the loss of revenue on real property in Will County that is owned by the State of Illinois for the purpose of developing an airport shall be based on the amount of taxes that would have been extended for the current tax year for the exempt parcel if the parcel had been owned by a person whose property is not exempt (currently, the amount of leasehold taxes extended for the 2002 property tax year). Amends the State Finance Act to provide that compensation from the Tax Recovery Fund shall continue through December 31, 2030 (currently, December 31, 2020).

 

SB 687 - The legislation imposes graduated income tax rates effective January 2021, if the constitutional amendment authorizing graduated rates is approved by the voters.

 

• Corporations will be taxed at a rate of 7.99% of the taxpayer's net income. 

• Individuals who do not file a joint return and have net income of $750,000 or less:
• 4.75% of the portion of the taxpayer's net income that does not exceed $10,000; 
• (B) 4.9% of the portion of the taxpayer's net income that exceeds $10,000 but does not exceed $100,000; 
• (C) 4.95% of the portion of the taxpayer's net income that exceeds $100,000 but does not exceed $250,000; 
• (D) 7.75% of the portion of the taxpayer's net income that exceeds $250,000 but does not exceed $350,000; and 
• (E) 7.85% of the portion of the taxpayer's net income that exceeds $350,000 but does not exceed $750,000;
•  In the case of taxpayers who do not file a joint return and have income over $750,000, 7.99% of all of the taxpayer's net income
•  
• For taxpayers who file a joint return and have net income of $1,000,000 or less: 
• (A) 4.75% of the portion of the taxpayer's net income that does not exceed $10,000;
•  (B) 4.9% of the portion of the taxpayer's net income that exceeds $10,000 but does not exceed $100,000; 
• (C) 4.95% of the portion of the taxpayer's net income that exceeds $100,000 but does not exceed $250,000; 
• (D) 7.75% of the portion of the taxpayer's net income that exceeds $250,000 but does not exceed $500,000; and 
• (E) 7.85% of the portion of the taxpayer's net income that exceeds $500,000 but does not exceed $1,000,000;
• In the case of taxpayers who file a joint return and have a net income of more than $1,000,000, 7.99% of all of the taxpayer's net income. 

SB 1041 - Amends the Property Tax Code. Provides that, in a county with more than 800,000 inhabitants but fewer than 1,000,000 inhabitants, if a lessee is liable for the payment of property taxes extended against property that is owned by a taxing district, the county treasurer shall promptly notify the taxing district that owns the property if the property taxes are delinquent 60 days after the second installment due date. Provides that the taxing district shall promptly notify the county supervisor of assessments upon the execution of a new lease or the termination of a lease. Provides that the State's Attorney of the county in which the property is located may bring an action against the lessee in the circuit court to recover the full amount of delinquent taxes, interest, penalties, and costs.

 

SB 1217 - Amends the Illinois Municipal Code. Provides that not less than 75% of the amounts collected by a municipality within DuPage County pursuant to the municipal hotel operators' occupation tax and municipal hotel use tax shall be used to promote tourism within that municipality. Requires that the municipality that belong to a not-for-profit organization headquartered in DuPage County that is recognized by the Department of Commerce and Economic Opportunity as a certified local tourism and convention bureau entitled to receive State tourism grant funds. Provides that the remainder of the amounts collected may be used by the municipality for economic development or capital infrastructure. Repeals the provisions on January 1, 2023.

 

SB 1257 - Amends the Illinois Income Tax Act. Makes changes concerning the calculation of base income for an organization that is exempt from the federal income tax by reason of the Internal Revenue Code.

 

SB 1456 - As the bill passed the Senate it amends the Property Tax Code. Provides that certain leasehold property that is used for an airport, for parking, or for waste disposal or processing and is used for a non-exempt purpose is subject to taxation as a leasehold for the period of time during which it is used for that non-exempt purpose. Provides that the use of a portion of that property for a non-exempt purpose shall have no effect on (i) the exemption of the remaining portion of the property that continues to be used for an exempt purpose or (ii) the future exemption of that same portion of the property if it ceases to be used for a non-exempt purpose and returned to use for an exempt purpose

 

SB 1456 was amended in the House to provide that the provisions of the engrossed bill apply only to property located in a municipality with a population of more than 500,000 inhabitants that is not subject to taxation due to its use for the purpose of parking. Makes conforming changes to the statutory base.

 

SB 1515 - Provides that, for purposes of being liable for income tax, compensation is paid in this State if some of the individual's service is performed within this State, the individual's service performed within this State is nonincidental to the individual's service performed without this State, and the individual's service is performed within this State for more than 30 working days during the tax year. Defines terms. Contains provisions concerning the calculation of compensation paid in this State if the employer maintains a time and attendance system.

 

SB 1591 - As originally introduced and as it passed the Senate this was the Chamber's Data Center initiative.  In the House, the bill was amended and the Data Center exemption language was replaced. The Chamber's Data Center initiative ended up in SB 690 described above.

 

As amended and passed by the General Assembly SB 1591 amends the Illinois Income Tax Act and provides that the research and development credit applies for taxable years ending prior to January 1, 2027 (currently, January 1, 2022). The bill also reates an income tax credit for qualified education expenses incurred by an employer on behalf of a qualifying apprentice, subject to certain limitations.

 

SB 1595 - Amends the Film Production Services Tax Credit Act of 2008 and provides that a taxpayer may not take a credit awarded under that Act for tax years beginning on or after January 1, 2027. 

 

SB 1614 - Amends the Revised Uniform Unclaimed Property Act. Provides that an heir or agent who files an unclaimed property claim in which the decedent's property does not exceed $100 may submit an affidavit attesting to the heir's or agent's capacity to claim in lieu of submitting a certified copy to verify a claim. Provides that the affidavit shall be accompanied by a copy of other documentary proof that the State Treasurer requests. Provides that the State Treasurer may change the maximum value by administrative rule.

 

SB 1800 - Amends the Illinois Income Tax Act and provides that taxpayers (other than estates, trusts, partnerships, Subchapter S corporations, and farmers) are required to pay estimated tax if the amount payable can reasonably be expected to be more than $1,000 (currently, $500). Provides that corporations are required to pay estimated tax if the amount payable can reasonably be expected to be more than $400 (which is the same as current law). Effective immediately.

 

SB 1932 - Amends the Property Tax Code to create the Property Tax Relief Task Force.

 

Tax-related House bills passed both Houses

HB 250 - amends the Property Tax Code to provide that, if property contains a hazardous substance, hazardous waste, or an underground storage tank, the court may order the holder of the certificate of purchase to assign the certificate to the county collector upon request of the county collector. Provides that the county collector may further assign the certificate to the county, acting as trustee for taxing districts, or to a taxing district having an interest in the taxes sold. In a Section that allows a tax purchase be set aside as a sale in error if a county, city, village, or incorporated town has an interest in the property under the police and welfare power by advancements made from public funds, provides that such a sale in error may not be granted if the lien has been released, satisfied, discharged, or waived.

 

HB 833 - Amends the Property Tax Code. Provides that, in a county with 3,000,000 or more inhabitants, for taxable years 2020 through 2024, a taxpayer who has been granted a senior citizens homestead exemption need not reapply (currently, the taxpayer must reapply annually).

 

HB 1438 - The recreational cannabis legalization bill.

Taxes:

• Craft growers: 7% of the gross receipts from sale to a dispensing organization
• Cultivation Privilege Tax: 7% of the gross receipts from the first sale of cannabis by a cultivator. (P.310 of Senate amendment 2)
• Cannabis Purchaser Excise Tax:
  • Cannabis-infused products: 20% of the purchase price
  • Other than cannabis-infused products based on THC level -
    • at or below 35% THC - 10% of the purchase price,
    • above 35% THC - 25% of the purchase price
• County Cannabis Retailers' Occupation Tax:
  • Up to 3.75% of the gross receipts in unincorporated areas of a county
  • Up to .75% of the gross receipts of sales made in a municipality located in a non-home rule county
  • Up to 3% of the gross receipts of sales made in a municipality located in a home rule county
• Municipal Cannabis Retailers' Occupation Tax Law - up to 3% of the gross receipts from sales
• Sales of cannabis are subject to Retailers' Occupation Tax Act 

HB 2209 - Amends the Property Tax Code. Provides that each tax bill shall contain a list of each tax increment financing (TIF) district in which the property is located and the dollar amount of tax due that is allocable to the TIF district. Effective immediately.